US Production Index for Sawmills and Wood Preservation Industries Posts Modest Increase in Q2

According to the Fed’s Industrial Production and Capacity Utilization data in its G.17 data, with additional analysis provided by the National Association of Home Builders (NAHB), the production index for sawmills and wood preservation industries rose marginally by 0.2% in Q2.

The decrease follows declines in the previous two quarters (2023Q4 and 2024Q1) and was the first rise in real output since 2023Q3, according to the G.17 data. Year-over-year, the index was 2.2% lower in Q2—the largest annual decline since falling 4.7% in 2021Q4.

NAHB notes that in order to provide a better understanding of the sawmill and wood preservation industries, the Census Bureau’s Quarterly Survey of Plant Capacity Utilization (QSPCU) is another source of interest. This data comes from quarterly surveys of US domestic manufacturing plants and includes a subindustry grouping of sawmills and wood preservation firms. The survey estimates utilization rates based on full production capability, meaning the utilizations rates are found by taking the market value of actual production during the quarter and dividing by an estimated market value of what the firm could have produced at full production capacity. In other words, the rate indicates how much production capacity is used to produce current output.

According to the QSPCU, the sawmill and wood preservation industry full utilization rates jumped significantly over the quarter, up from 61.9% to 70.7%. Given this rise, it is surprising that production did not also increase significantly, NAHB said. Average plant hours per week in operation did rise for these firms, up from 47.9 hours in Q1 to 57.7 hours in Q2.

Employment at sawmill and wood preservation firms rose for the first time in six quarters, up to approximately 89,400 employees in Q2. The Great Recession had a substantial impact on this industry, as employment fell from 105,630 in 2008Q1 to a series low of 80,470 in 2009Q4. Employment rose from this low to 91,000 in 2014 and has remained around this level for the last ten years.

Finally, NAHB notes that according to Census international trade data, imports remain critical to meeting US demand for softwood lumber. In the month of September alone, imports of softwood lumber stood at 1.1 billion board feet. Canada was the primary country of origin, exporting 987 million board feet into the US in September.